How does a card know how much money is in the bank?

When we’re in the shops Mum uses her debit card at the till instead of using notes and coins. How does a bit of plastic know how much money she’s got?

Great question! These days, people don’t carry money around as much as they used to. It’s much more convenient to use a debit or credit card in shops – you’ll see card readers at almost every till. So how do they work?

The answer is hiding in the computer chip – you can often see these quite easily on a card – they’re silvery or gold coloured, and about the size of a fingernail.

The chip holds information about the owner of the card – including the all-important PIN code.

PIN stands for Personal Identification Number and it’s a four digit code.

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The person buying the goods will need to type their PIN in – the card reader can then check the information on the chip to ensure that there’s a match. It’s a clever way to make sure only the person who owns the card can use it.

If the PIN is wrong, you won’t be able to pay for the goods. If the PIN is right, the card reader sends a message to the bank over internet or telephone line to tell them to move the money to the shop’s account. It’s all done in a matter of seconds!

Then, as long as there’s enough money in your account, the transaction is completed, and you can pick up your bags and off you go!